Footnote:
Nach Informationen von SSRN wurde die ursprüngliche Fassung des Dokuments August 29, 2020 erstellt
Description:
We study the effect of stakeholder orientation on operations outcomes. Our work contributes to the sustainable OM literature by identifying the functional separation between shareholders and managers as a fundamental determinant of responsible operations. For identification, we exploit a quasi-natural experiment provided by the staggered adoption of constituency statutes across U.S. states, allowing executives of affected companies to explicitly account for the interest of non-equity stakeholders into their corporate decisions. We find that stakeholder orientation, as measured by the KLD social responsibility index, increased by 21% for firms incorporated in constituency states (treated firms) relative to firms not incorporated in constituency states (control firms) in the post adoption period. We also find that number of suppliers, payables, and inventory increased by 21.3%, 6.3%, and 4.3%, respectively, for treated firms relative to control firms post adoption, indicating that operations outcomes shifted with the emphasis on stakeholder interests induced by the reform. Further, we find an improvement in production efficiency, in terms of lower cost of goods sold and operating expenses, which ultimately benefited shareholders by increasing firm value by nearly 6%. In line with our model, these findings suggest that allowing executives to incorporate the interests of non-equity stakeholders can be beneficial not only to these stakeholders but also to shareholders. Interestingly, while constituency statutes were intended to protect executives adopting stakeholder-oriented policies against the actions of shareholders, therefore limiting shareholders' ability to sanction executives, our findings suggest that constituency statutes ultimately benefited not only executives and non-equity stakeholders, but also shareholders. Altogether, our results indicate that executives and policymakers need to assess the implications of regulatory changes beyond their target constituencies